26 Comments:

Interesting, Mark. All 19 of the DJIA companies you described as manufacturing companies are also on Industry Week's list of manufacturing companies. I suppose the same critic of your list will likewise be ready to criticize Industry Week's list.

I'm not familiar with all the products which Microsoft and IBM provide their customers. Based on my exposure to those companies, I would agree with morganovich that they are not primarily manufacturing companies. At least, as I understand the government's NAIC and SIC classifications, I don't believe those two should still be considered manufacturers.

"Microsoft Hardware for Business, available through qualified resellers, is an easier way to purchase and deploy Microsoft Hardware. Our full line of products for business—from webcams and headsets to keyboards and mice—are designed to work seamlessly with Microsoft software and help save you money, increase productivity, and improve employee comfort."

Would you be able to point me to where I can find how much taxes each industry paid so I can effectively show progressive friends that the oil industries effective tax rate was higher than the 35% corporate tax rate? Thanks.

I can understand the quibbles on categorizing IBM and Microsoft as manufacturers. It could be viewed that MSFT assembles code for resultant software products. IBM has transformed itself into a service company but it still produces "Big Iron" mainframes which they call mainframe servers.

One Dow component, McDonald's, is probably more of a manufacturer then IBM or Microsoft. Go into a McDonald's at breakfast or lunch, and watch the assembly line of food inputs into a McMuffin or McChicken.

The question for me is not whether IBM sells big iron mainframes, but whether they actually manufacture them.

Ignoring morganovich's limited definition of manufacturing, I'll refer instead to the federal government definition of manufacturing:

"The Manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products. The assembling of component parts of manufactured products is considered manufacturing, except in cases where the activity is appropriately classified in Sector 23, Construction."

If IBM actually crafts the components of its Big Iron Mainframes, then it is clearly a manufacturer of them.

If IBM assembles its Big Iron Mainframes from components crafted by someone else, it is also a manufacturer of them.

But if IBM outsources the entire crafting and assembly, and only adds operating system software, then I'm not sure we should still call IBM a manufacturer of Big Iron Mainframes.

Jet, I think the problem is that the definition of manufacturing includes both transformation and assembly.

Is Boeing a manufacturer or a very large scale assembler? BA transforms some carbon fiber filaments into tail sections, but assembles the great majority of inputs, transformed by others, into aircraft.

I wonder if Greg Mankiw would concede that McDonald's is an assembler of Quarterpounders and not a manufacturer? (not trying to get Prof. Mankiw back into unjustified controversy):>)

And how many people are employed at these companies nowadays? Every few months I go past the IBM plant where my late father worked for 32 years. There are a lot less cars in the parking lot. But the corporate pay,that has skyrocketed. But it's minimum wage workers who are greedy, not corporate executives.

I'm not familiar with all the products which Microsoft and IBM provide their customers. Based on my exposure to those companies, I would agree with morganovich that they are not primarily manufacturing companies.

Notice how ADM, Boeing, United Technologies, Lockheed Martin, and GE depend on government subsidies or mandates for some of their profits? And aren't ExxonMobil, Chevron, Conoco, and the coal companies also in the mining business?

VangeIV: " aren't ExxonMobil, Chevron, Conoco, and the coal companies also in the mining business?"

Yes, that's true. I thought the Census and the BLS attempt to separate the revenues and employees of these companies into different sectors when creating statistics about manufacturing and mining.

Of course, as I commented on a prior post, ExxonMobil reports that almost 80% of its revenue from outsde the company is derived from downstream operations (chiefly refining) and chemicals production. There is no doubt in my mind that ExxonMobil is primarily a manufacturing company.

In you comment on the other manufacturing post, you semmed to argue that drug companies are not manufacturing companies, but rather drug development companies. Why do you make such a distinction? Merck most definitely manufactures the products it sells at the 77 factories it owns and operates.

Would you describe DuPont as a chemical development company rather than a chemical manufacturing company?

In any case, you nor morganovich seem to ignore the NAIC and SIC codes which are widely used by government and industry for classifying companies. Both sets of codes categorize production of defense armaments and pharmaceuticals as manufacturing.

There is no doubt in my mind that ExxonMobil is primarily a manufacturing company.

I have no trouble with this statement. But I do think that the case about manufacturing was overestimated by people looking for straws to grasp.

Yes, that's true. Not sure about ADM, but there should be little dount that the other 4 are manufacturing companies. Not sure what point you're making.

I am sorry. I thought that my point was clear. I was just trying to point out that without huge subsidies many of the manufacturing companies would be a lot smaller relative to the rest of the economy. Imagine how much smaller the weapons companies would be without government largesse. How much less profit would GE have without the massive green energy subsidies that allow it to cover its losses in its other segments or engine sales for jets that are not really needed.

In you comment on the other manufacturing post, you semmed to argue that drug companies are not manufacturing companies, but rather drug development companies. Why do you make such a distinction? Merck most definitely manufactures the products it sells at the 77 factories it owns and operates.

The revenues do not come from the low margin manufacturing activities but from the patent protection granted to drugs that Merck developed.

Would you describe DuPont as a chemical development company rather than a chemical manufacturing company?

It depends on which revenue stream you look at. Off patent products are certainly in the manufacturing category. But chemicals that provide huge margins because DuPont owns the patent would fit in the development category.

In any case, you nor morganovich seem to ignore the NAIC and SIC codes which are widely used by government and industry for classifying companies. Both sets of codes categorize production of defense armaments and pharmaceuticals as manufacturing.

I cannot speak for morganovich but I do not put much faith in the way that governments report anything.

It is interesting that the oil and mining areas are the largest of the groups. Since they are so highly capital intensive and therefore demand very high returns on capital rather than labor, I wonder if this is one of the causes of seemingly low wage rates within the manufacturing sector.

It is interesting that the oil and mining areas are the largest of the groups. Since they are so highly capital intensive and therefore demand very high returns on capital rather than labor, I wonder if this is one of the causes of seemingly low wage rates within the manufacturing sector.

Low wage rates? Where is the evidence that skilled positions in the manufacturing sector are not getting paid well enough?